Apple Pay – What it Means for Retail

Apple Pay has been live for over a week in Ireland and launched in the UK back in July 2015, just nine months after it’s initial launch in the US.  This new payment system is designed to change the way we shop and promises better security and quicker checkout times.  It’s easy to install and once set up, Apple Pay is touted as the one device you can rely on in order to pay for goods and services in a secure manner.   The merchant page on the Apple Pay site reassures retailers that it is ‘more secure than accepting traditional credit or debit cards’ and the retailers do not receive the customers actual credit or debit card numbers,  therefore making it safer.  Furthermore, there are no set up costs or additional fees, so the barriers are non existent – once you have the most up to date technology with contactless enabled.  The same limits apply for contactless payments and the same liability rules apply.

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A Growing Trend

The UK first introduced contactless payments in 2007 and has seen a surge in popularity (totalling £2.32 billion in 2014).  Contactless has become a mainstream requirement for many consumers who cite the ease of transaction and speed as the main drivers for adoption.  Introducing Apple Pay promises to deliver on these two priorities for consumers and instantly addressing their security concerns (according to Finextra, 37% of consumers raised concerns about security.

The new system promises to be faster as it enables users to simply hold a phone near the card reader and approve the payment with Touch ID on the iPhone or by double clicking the side of the Apple Watch.  It’s not just in person sales that will benefit but purchases can be made online, with ‘just a touch’.   Apple Pay promise complete security by allocating each purchase to a device-specific number and unique transaction code.  This ensures that a customers number is never stored on their Apple device nor will card numbers be shared with the retailer.

Both Ulster Bank and KBC Bank have joined forces with Apple Pay but Bank of Ireland and AIB have yet to enter an agreement.  Retailers will be able to accept payments where contactless options are available and apps such as Deliveroo and Easy Jet are already on board and accepting Apple Pay transactions.

Apple Pay really has set off a change in the credit card industry.  While the idea of mobile payments is not a new one, Apple has embedded itself into the centre of the payments industry due to the ease of use and number of readymade users.  Apple brought this same level of change to the music industry with the launch of iTunes and we expect to see similar with their latest development.   But what of their competitors? Amazon One Click made the checkout seamless and fast for consumers, but that only went as far as Amazon.  PayPal have tried to bring contactless, mobile payments to bear but without the same level of success.

But What are the Main Benefits?

• Better Experience for Shoppers:  In the same way that Amazon One Click speeds up online check out, Apple Pay will save consumers time as it is a seamless transaction that can be completed by placing the iPhone close to the contactless pad or clicking a button on the side of their Apple Watch
• Eliminates Credit Card Fees: While retailers did not benefit from credit card fees, they were faced with complaints by angry consumers who begrudged paying the fees to the bank for each transaction. Apple has negotiated directly with banks to receive a portion of each transaction instead of the usual transaction fees that retailers face.  These savings can then be passed to the consumers.
• Increases Security: The consumers credit card details are stored securely within the ‘Passbook’ application and a single use payment token is generated for each transaction.  Retailers never have to worry about managing card details and consumers can rest in the knowledge that their credit card details are secure – even in the result of losing a mobile phone.

Overall, Apple Pay is a positive step for retailers and consumers alike, making transactions seamless, both on and offline from first engagement to final delivery.  If you have questions about Apple Pay, you can contact one of Retail Industry Specialists by completing this form.

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